Navy enveloped in bribery, billing debacle involving Asian defense contractor
The Navy is being rocked by a bribery scandal that federal investigators say has reached high into the officer corps and exposed an overbilling scheme run by an Asian defense contractor in exchange for prostitutes and other kickbacks.
Among those arrested on corruption charges are a senior agent for the Naval Criminal Investigative Service and a Navy commander who escaped Cambodia's “killing fields” as a child only to make a triumphant return to the country decades later as the skipper of a U.S. destroyer. The investigation has ensnared a Navy captain who was relieved of his ship's command this month in Japan.
The chief executive and another company official of the Singapore-based defense contractor, Glenn Defense Marine Asia, were arrested last month at a San Diego harborside hotel when federal investigators lured them to the United States by arranging a sham meeting with Navy officials, according to court records and people involved in the case.
The unfolding investigation is shaping up as the biggest fraud case in years for the Navy. Federal prosecutors allege that Glenn Defense Marine, which has serviced and supplied Navy ships and submarines at ports throughout the Pacific Ocean for a quarter century, routinely overbilled for everything from tugboats to fuel to sewage disposal.
Investigators are assessing the scope of the alleged fraud, but federal court records filed in San Diego cite a handful of episodes that alone exceeded $10 million. Since 2011, Glenn Defense Marine has been awarded Navy contracts worth more than $200 million. The company services ships from several navies in Asia.
The military has never been immune from contracting scandals, but it is extremely rare for senior uniformed commanders to deal with corruption charges.
“Allegations of bribery and kickbacks involving naval officers, contracting personnel and NCIS agents are unheard of,” said retired Adm. Gary Roughead, a former chief of naval operations who is a distinguished visiting fellow at the Hoover Institution at Stanford University.
Roughead recalled meeting the chief executive of Glenn Defense Marine, Leonard Glenn Francis, nearly a decade ago while serving as commander of the U.S. Pacific Fleet. He said he was unfamiliar with details of the investigation, but he called the allegations “extremely serious, disconcerting and surprising.”
According to court papers filed by federal prosecutors in San Diego, Francis and others in his company targeted Navy personnel serving in Asia and plied them with prostitutes, cash, luxury hotel rooms, plane tickets and, on one occasion last year, tickets to a Lady Gaga concert in Thailand.
In exchange, Francis sought inside information on ship deployments and pressed at least one high-ranking commander to steer aircraft carriers and other vessels to ports where his firm could easily overcharge the Navy for pierside services, the court documents allege.